After showing signs of recovery in quarter four of last year, business confidence has taken a nose-dive again as business owners are unsure when the debilitating power crisis that leads a list of hurdles confronting them will be resolved.
The 2015 first quarter results of the AGI Business Barometer Survey shows business confidence dipped by thirteen points from 98.0 to 85.0, with the AGI fearing a lot of jobs will be lost in the next six months if the power crisis in particular is not resolved.
The survey shows businesses are neither absorbing job-seekers nor are they sure of doing so in the next six months, as about 50 percent of CEOs interviewed said their employment levels will remain the same while 27 percent said they are sure to lay-off workers.
“For a growing nation with large numbers of students coming out of our universities, whenever we see job decreases being more than increases it should be a concern,” Seth Twum Akwaboah, AGI’s CEO, told journalists at a presentation of the results in Accra.
“It means the manufacturing sector is not absorbing workers that much. Mind you, this also includes the services sector. So, clearly, we are not increasing employment,” he said.
All sizes of businesses as categorised in the survey — micro, small, medium, large and African giants — named the nagging power crisis as their number-one challenge.
The cedi’s depreciation was second for all sizes of businesses except the micro sector, which named unfair market competition as its number-two challenge.
In a limited analysis of companies’ fuel expenses, the survey showed that large companies spent between GH?15,000 and GH?25,000,000 from October 2014 to March 2015, while SMEs spent between GH?1000.00 and GH?6,600,000.
“When it comes to employment companies are cautious in asking people to go home because it involves losing key staff, paying severance and all. So a lot of companies are actually absorbing some of these costs — and some of them are actually operating at a loss,” Mr. Akwaboah said.
“But there is a limit to which they can absorb these costs. It gets to a point where they cannot contain these losses anymore, and they will have no choice than to lay-off staff or close down.”
The quarterly AGI Business Barometer Indicator measures the level of confidence in the business environment; it simply expresses the state of the business climate numerically in one figure, with 100 as the base index.
After dipping steeply to an all-time low of 22.42 in the second quarter of 2014, confidence in the business environment picked up subsequently and reached 98.0 in the fourth quarter of that year.
While the AGI was hoping it would pick up further above the 100 base index, it has however dipped.
“Whenever the index falls below the 100 base index it means that business confidence is weak and we need to be worried. In other jurisdictions, even a one-point drop in confidence is a major issue. So we should not take these issues lightly at all. It means there is something wrong with our business environment,” Mr. Akwaboah indicated.